Project Abstract This project will produce the most comprehensive evidence to date on how the U.S. disability insurance system affects the human capital of disabled workers. Using a new conceptual framework, we will develop and apply innovative quasi-experimental methods to newly assembled administrative data in order to show how the disability insurance system not only induces workers with health problems to leave the labor force in order to apply for benefits, but also erodes their employability while they wait out long application processing times during multiple levels of appeal and review. Our approach will produce the best estimates to date of the latent work capacity of disabled workers overall, and of older workers specifically. These estimates will be useful for designing effective reforms that would promote greater labor force attachment among disabled workers.